If you spend enough time in risk-tolerant places (e.g. startups, blockchain) you start to notice a particular pattern. A charismatic founder, call them Alice, starts a new project. The project seems to be transparently stupid or bullshit, but somehow they manage to secure a lot of funding and/or users. After a while, the project fails, probably after providing no value to anyone… but Alice comes out of it well, having cashed out through high salary or selling lots of stock/tokens/whatever.

There’s a variant of this which is just fraud: if Bob starts a project and raises money while believing that the project is bullshit then that’s just a scam. There is intent to deceive people out of their money.

There’s also a variant of this which is fine: if Carol starts a project, raises money, tries very hard, and then the project fails due to reasons beyond Carol’s ability to predict, then that’s just life. There is no intent to deceive, everyone is trying their best, they were just wrong. This is true even if you could predict the project would fail – perhaps you’re just more competent than Carol! It’s not immoral to be incompetent (but perhaps the investors should have done a better job).

Then there’s the middle ground, where you squint at Alice and go: do you… sort of know that this is not going to work? Perhaps this is not Alice’s first time around the bullshit rodeo, mysteriously coming out of the flames with a healthy bank account. Is it really just bad luck and difficult problems? Or is it something more?

People are certainly capable of promoting their interests through self-deception. Perhaps Alice feels a niggling sense of unease whenever they think about a particular corner of their business plan, but avoids thinking about it because after all, if the business plan isn’t good, how are they going to get the money?.

Another approach is to deliberately avoid developing the skills that you would need in order to be discerning. If Alice is a charismatic leader and fundraiser, who is confident in their ability to sell anything, then they can simply pick up a random technical co-founder and sell their project. If it doesn’t work out, well, Alice is just the salesperson, they aren’t qualified to judge the technical roadmap, if anything they got scammed by that weaselly nerd who told them it was feasible!

I think unconscious scammers are blameworthy. Not as much as deliberate scammers, since self-deception can be easy to do do oneself without noticing, but they still predictably burn piles of money for their own advantage.

Obviously you want to avoid both the conscious and unconscious scammers. I don’t know how to spot them reliably, but I think a sign is how they deal with potential weaknesses in their plan. A scammer wants you to think there aren’t any, an unconscious scammer will think they should have an answer but it will somehow avoid facing up to reality fully, and an honest and competent person will hopefully be direct and admit if they just don’t have a solution. The best thing is if they actively test whether or not their solutions to weaknesses actually work. Of course, a sufficiently advanced scammer will imitate honest behaviour at increasing levels of fidelity, so good luck.